China Stock ETF Jumps as Party Unveils Economic Policy

China vowed to allow more private investment in the state sector, loosen its one-child policy and better protect farmers’ rights to land, according to the Communist Party policy decision published today by the official Xinhua News Agency. Photographer: Brent Lewin/Bloomberg

Nov. 15 (Bloomberg) -- The biggest U.S.-listed China
exchange-traded fund jumped after the government pledged to
boost private investment as part of economic policy changes.

The iShares China Large-Cap ETF climbed 3.4 percent at 9:38
a.m. in New York. The Bloomberg China-US Index of the most
traded Chinese stocks in the U.S. added 2 percent. The Shanghai
Composite Index rose 1.7 percent and the Hang Seng China
Enterprises Index of mainland companies listed in Hong Kong
rallied 3 percent amid speculation about reforms before a report
by the official Xinhua News Agency detailing the changes.

China vowed to allow more private investment in the state
sector, loosen its one-child policy and better protect farmers’
rights to land, according to the Communist Party policy decision
published by Xinhua. The document, covering 60 measures, follows
a communique issued Nov. 12 after a four-day party conclave in
Beijing that omitted detailed policies for the world’s second-largest economy.

“Today’s news is positive -- we have a constructive stance
on China,” John Lomax, emerging-market strategist at HSBC
Holdings Plc, said by phone from London. “There was a bit of
disappointment from the communique -- in headline terms -- as
the detail was missing, so it’s good to see it being provided.”

Couples may have two children if either parent is an only
child, according to the decision. Under China’s current family-planning policy, couples are allowed to have a second child if
both parents are only children. Today’s document said the party
plans to implement the reforms by 2020.

Farmers Rights

The announcement builds on pledges to elevate the role of
markets in the nation while keeping the state in a “dominant”
position. China is seeking to balance finding new sources of
growth with sustaining the Communist Party’s grip on power as
President Xi Jinping faces challenges from debt to demographics.

The government will give farmers rights to share, profit
from, sell, collateralize and inherit ownership in collective
assets, the document said, adding that a rural property market
will be established. Restrictions imposed under the household
registration, or hukou, system set up under Chairman Mao Zedong
will be scrapped in towns and small cities and gradually relaxed
in medium-sized cities, while the sizes of mega-cities will be
strictly controlled.